Pennsylvania tops U.S. in lost bank branches

Shuttered bank branches outpaced new ones across the United States, with Pennsylvania leading the pack.

Banks closed 2,001 branches nationwide during the 12 months ended June 30 and opened 1,234 branches for a net loss of 767, according to a study released last week by SNL Financial, a Charlottesville, Va.-based provider of business data and analysis.

The Keystone State’s 83 net closures led the nation, followed by Georgia’s 51 and Virginia’s 46. Banks closed or consolidated 119 branches in Pennsylvania and opened just 36. The Philadelphia-Camden-Wilmington metro area’s 30 net closures were the most of any U.S. metropolitan statistical area.

Pittsburgh ranked 10th, with 13 net closures. The region added 10 branches but closed 23. Pittsburgh’s big hit was during the first three months of 2012, when 17 branches closed. That was largely due to F.N.B. Corp. consolidating 15 branches in February, part of its in-market acquisition of Parkvale Financial Corp.

More closures are anticipated: F.N.B. plans to consolidate another 20 branches during the fourth quarter, President and CEO Vincent Delie Jr. said. The locations were not disclosed, but Delie said they are spread throughout its 300-mile footprint.

“I doubt you’ll see a major impact here,” Delie said. “There are a handful in this market, but at this time, it’s not fair to our employees and we’re still making accommodations for the customers, so it’s not proper (to disclose the locations.)”

F.N.B. expects one-time costs of $2.5 million as a result of the closures, but it will eventually realize “significant savings” of $4 million and increased efficiencies, enabling it to better focus resources and leverage its investment in upgraded e-delivery channels.

“It’s the right thing to do, but it’s a difficult thing to do,” Delie said.

Consolidation resulting from acquisitions is a big reason for closures across the country. SNL’s report listed the nation’s most active branch closers and many, including M&T Bank and First Niagara Financial Group Inc., pruned because of overlap from acquisitions. Six of the 10 banks that cut the most branches operate in the Philadelphia area.

“(Pennsylvania) is still over-banked, and in the Philly metro area they’re tripping over themselves and there’s not that much business,” said Richard Weiss, a financial analyst at Janney Montgomery Scott’s Philadelphia office.

Delie believes the trend will continue.

“You’ll see more of it (because) Pennsylvania is one of the least consolidated states, and as we move into a more difficult operating environment, smaller institutions will have to partner up to cope with that regulatory burden and margin compression,” Delie said.

Henry Beukema III, president and co-director of equity research at Guyasuta Investment Advisors, agreed.

“Branches are just being looked at much more closely than they were pre-2008 financial crisis,” Beukema said.

Still, Pittsburgh won’t just see contraction. First Niagara cut elsewhere but not here; the Buffalo, N.Y.-based bank added a branch here in June and has sites lined up for four more by year-end. Several banks say there are locations in the local marketplace where they want to have a branch presence, including F.N.B., which wants offices in Sewickley and Shadyside.

The metro region that had the highest net increase owed some of its showing to Pittsburgh’s largest bank — Miami-Fort Lauderdale-Pompano Beach, Fla., had a net gain of 29 branches. PNC Financial Services Group Inc. added seven there during the fourth quarter of 2011 and first quarter 2012, part of a 17-branch build out PNC announced early last year.